Tata power is India’s leading private power Sector Company with expertise in full value chain. Tata Power Company Ltd, Tata Hydro Electric Power Supply Company Ltd and Andhra Valley Power Supply Company Ltd all licensees as per the Electricity Supply Act, are jointly managed as Tata Electric Companies. Company works as a mix of thermal and hydropower generation, it supplies to the highly industrialized area in and around Mumbai. Any shortfall in generation is met through purchases from MSEB. In June, 2002 Tata Power acquired 51% stake in North West Delhi Distribution Co. Investment and Credit Rating Agency (ICRA) retained the LAAA rating assigned to Tata Power its non-convertible debentures (NCD) issue aggregating Rs 1,000 crore. Company has a joint venture “New Delhi Power Limited” with the State Government of Delhi for its North Delhi consumers, the NDPL serves over 8 lakhs satisfied consumers with a peak load of 1050 MW, also providing state-of-the-art technology driven processes for enhancing consumer bil ling and related services.

Products & services—

Company provides consistent power supply and timely service to the Mumbai city and keeps the reputation of having the best power supply in India. A significant amount of power is supplied to the metro’s railway network, refineries, ports, BEST and Reliance Energy Limited. Company has now successfully served the Mumbai consumers for over nine decades and has spread its footprints across the nation. Company also supplies power directly to such bulk consumers as Central and Western Railways, Mumbai Port, refineries, textile mills, fertilizer factories, BARC, Municipal Corporation water pumping plants and other major continuous processes industries requiring uninterrupted power supply. The latest addition to the list is the commercial district at the Bandra-Kurla Complex and major commercial and residential complexes in the suburbs.

Company has capability in setting up Independent Power Plants, Setting up Captive Power Plants, Power Transmission and Distribution Projects, Operation and Maintenance Services, Remnant Life Assessment and Performance Evaluation Services of Power Plant Equipment and in overseas projects (i.e. Erection, Testing, Commissioning & Trial operations, Power Plant/Utility Operations Management and Plant Operators Training).

Except Mumbai, the company has generation capacities in Jojobera, Jharkhand and Karnataka. Tata Power has an installed power generation capacity of above 2785 Mega Watts, with the Mumbai power business, which has a unique mix of Thermal and Hydro Power, generated at the Thermal Power Station, Trombay, and the Hydro Electric Power Stations at Bhira, Bhivpuri and Khopoli, accounting for 1797 MW. Its diverse generation capability facilitates the company in producing low cost energy, thereby giving its consumers a greater value for money.

Tata Power Trading Company Limited (TPTCL), a wholly owned subsidiary of the Tata Power Company has been awarded the first ever power trading license by the Central Electricity Regulatory Commission (CERC) under section 14 of the Electricity Act 2003, enabling it to carry out transactions all over India.

International Projects - Leveraging upon its engineering skills and understanding of the power business, Tata Power has carried out several overseas projects and successfully completed erection, testing and commissioning of major power projects in Saudi Arabia, Bangladesh, Kuwait, Algeria, Myanmar and Thailand. Company has also undertaken projects pertaining to power plant / operations management and plant operations training.

Strategic Electronics Division (SED) - The Strategic Electronics Division of Tata Power has been in operation for over 30 years and has been pursuing development and production activities for the Indian defence sector. SED successfully developed the Multi Barrel Rocket Launcher, ‘Pinaka’, proven in the field through extended user trials which led to its induction into the Indian Army. The Division has developed specialized equipment for Air Defence and Naval Combat systems.

Transmission Business – Tata Power owns over 1200 circuit Km of high voltage (220 kV and 110 kV) Transmission Network. Company has a 51% stake in the Rs 1200 Cr, 1200 Km Tala Transmission project, which is a joint venture with the Power Grid Corporation of India. The JV Company named Powerlinks Transmission Limited.

Distribution Business – Tata Power has over 935 km HT and LT cable distribution network connecting 17 major receiving stations and over 85 sub-stations in its Mumbai License area. With the privatization of Delhi Vidyut Board (DVB), Tata Power Company holds managing control in the distribution company North Delhi Power Limited (NDPL). NDPL today distributes and supplies power to the North and North-West areas of Delhi.

Recent Developments—

Tata power is planning to produce 25% power from green sources by 2017; by increasing its wind and solar energy generation capacity to 2,000 MW and 250 MW respectively, which could entail an investment of over Rs 130 billion. Company is looking for viable locations in Gujarat, Maharashtra, Karnataka and Tamil Nadu. Tata Power has two wind power generation projects each in Maharashtra and Gujarat and one in Karnataka with a cumulative capacity of 195 MW. An additional 100-MW plant is under construction in Gujarat.

Tata Power has signed a Memorandum of Understanding (MoU) with Korea East West Power Company (EWP), one of the largest generation utilities of Korea, to identify and execute operation and maintenance opportunities relating to third party Generation Assets in Asia, Middle East and Africa. Under this MoU, Tata Power and EWP have initiated a technical cooperation in the field of operation and maintenance of the generation assets. The technical cooperation shall cover exchange of information, best practices and exchange of personnel relating to the operation and maintenance of the generation assets.

Tata Power and SN Power, Norways’s fastest growing international renewable energy company, signed an exclusive partnership agreement to develop joint hydropower project in India and Nepal. This is the first time that Tata power has entered into an exclusive partnership with another hydropower company. The partners aim to have 2,000 mw under construction or in operation by 2015, and the total of 4,000 mw by 2020. Both the companies have already begun pursuing potential project opportunities based on the vast reserves of renewable energy in the Himalayas.

Coastal Gujarat Power (CGPL), a wholly owned subsidiary of Tata Power, has tied up with Texas-headquartered Invensys Operations Management, to optimize India’s first ultra-mega 4000MW power plant located in Mundra. The plant will be India’s largest coal-fired power plant when completed in 2013. Invensys will provide distributed and critical control systems, emergency shutdown systems, advanced process control, plant optimization and operator training simulator technology. The scope of the project includes the provision of end-to-end solutions, from boiler management systems to turbine auxiliary controls, with interfaces for seamless systems integration with other technology vendors. Coastal Gujarat Power can immediately leverage the global expertise and engineering capabilities of Invensys, giving them the assurance of proven delivery capability and commitment to train Coastal Gujarat’s operators.

Valuation—

Tata Power is planning to become an integrated energy company, making its international presence in all kind of power generations. At current market price, stock is trading at 24.5 P/E multiple of its FY2011 estimated EPS. We recommend investors “buy” “Tata power” with medium to long-term investment prospective.